Asked by Desirae Whitmer on Jul 14, 2024
Verified
What is the effective rate of interest on a credit card that calculates interest at the rate of 1.8% per month?
Compounded Monthly
Compounded monthly refers to the process where the interest earned on an investment is added to the principal sum each month, causing the principal amount to grow at an increasing rate.
Effective Rate
The actual interest rate an individual pays or earns on a loan or investment, taking into account the effects of compounding.
- Derive the effective annual rate using nominal interest rates that compound over varying intervals.
Verified Answer
MD
Learning Objectives
- Derive the effective annual rate using nominal interest rates that compound over varying intervals.